One of the critical factors affecting profitability in business, is the ‘true cost’ of products and services sold. It’s vital to know what things cost… so that you can price them right to ensure a profit.
After costs are deducted i.e. cost of goods sold, labour and materials on jobs etc. you then have to take into account other expenses such as rent, wages, advertising etc. These expenses can easily ‘eat up’ your profit if not closely monitored and managed.
Regular analysis of costs and expenses, can be the difference between making losses or breakeven and profitability.